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October a Treat for Bonds and Rates
October 10th, 2014 12:04 PM
In recent weeks, Stocks have seen a sell-off while Mortgage Bonds have pushed considerably higher. Why has this happened? Concerns about slowing global economic growth have pushed investors into the safe haven of the Bond market, and investors have also secured profits with Stock prices near all-time highs. 

But there's another reason that's important to mention. After the first and second rounds of the Fed's Bond-buying program (known as Quantitative Easing) ended, Stocks performed terribly—and that behavior seems to be repeating itself as the Fed's latest version of its Bond-buying program is nearing its end later this month. But that's not all that could impact the markets in coming weeks. If corporate earnings are worse than expected, Stocks could continue to drift lower, meaning Bonds and home loan rates could continue to benefit. This will be a key story to monitor in the weeks ahead. 

In housing news, research firm CoreLogic reported that home prices rose by 6.45 percent from August 2013 to August 2014, which is down from the annual figure reported in July. CoreLogic went on to say that home prices are 12.1percent below the peak seen in April 2006. Looking forward, prices are expected to increase 5.2 percent from August 2014 to August 2015. The takeaway from this is that home price gains have slowed to more normal and sustainable levels, after the large appreciation seen last year. 

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Posted by Eric Fang on October 10th, 2014 12:04 PMPost a Comment

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